Sunday, April 21, 2013

Big Wave Trading Portfolio Update And Top Current Holdings

Due to the distribution this week in all of the major market indexes, the breakdowns in leading stocks, and constant lagging in the Russell 2000, the market direction model has switched to NEUTRAL on all major market indexes. The short-term current market environment has gotten choppy over the past few weeks and this action is definitely weighing on the model. The lagging Relative Strength of the Nasdaq and Russell 2000 has made this rally all year long suspect but our individual long signals continued to work relatively well despite this. This is more of a byproduct of our long signals coming from big-cap big-board indexes. However, the overall lagging action of the Nasdaq and Russell 2000 was always a cause for concern. It should not be assumed that since we are now under a NEUTRAL condition that the very next signal is going to be a switch to a SELL mode. While it does appear the market is finally ready for a correction based on the way stocks are acting post-earnings, there are still plenty of leading stocks that are clearly forming decent consolidation patterns. A market reversal back to new highs would have many of these stocks easily breaking out of their current consolidation pattern. Therefore, it is best to remain very neutral here and wait to see which way the market breaks out of this consolidation zone the Nasdaq, Russell 2000, and SP 500 are in before convicting oneself to one side or the other of this market. We will continue to play individual stocks as they produce signals in either direction, keeping capital very limited in our selections during this bifurcated US economy and stock market. As long as the market rallies overall on low volume, it is going to be very hard to go 5%, 10%, and science forbid 20% long on a new long or short signal. We will just have to keep taking what the market gives us, either concentrating heavily into the best leading stocks in leading industry groups like Biotechs or keeping individual plays at a minimum with tight stops. The most important play for us right now is to continue to have a lot of cash on hand in case we get a screaming signal to the short side signaling that this market is done on the upside. The other scenario is having a lot of cash on hand in case the market breaks out higher and we get our once-reliable extremely strong price/volume signal to get heavily long a handful of leading stocks. While the latter scenario seems quite implausible it is still a possibility. However, truth be told, we are really waiting to hammer this market on the short side once it becomes apparent the QE low volume stock market manipulation rally is coming to an end. We might still be three years away from that though. Until then, we will ride the bucking bronco. Have a wonderful and profitable upcoming week everyone. Try not to psychoanalyze everything out there too much. Aloha! Top Current Holdings – Percent Gain – Date of Signal EAC long – 154% – 12/17/12 HIMX long – 130% – 12/19/12 CSU long – 96% – 9/4/12 POWR long – 87% – 12/11/12 CAMP long – 69% – 4/26/12 GNMK long – 69% – 11/16/12 FLT long – 65% – 9/6/12 ASTM short – 64% – 7/17/12 HEES long – 58% – 9/4/12 SBGI long – 41% – 3/22/13 WAGE long – 38% – 1/8/13 CPSS long – 35% – 1/31/13 BBSI long – 34% – 2/13/13 PFBI long – 29% – 11/19/12 AXLL long – 28% – 1/4/13 GLL long – 28% – 2/14/13 V long – 27% – 8/31/12 CHUY long – 25% – 1/10/13

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